Last updated: September 17, 2024
Flutter Entertainment is expanding its footprint in Brazil by acquiring NSX Group for $350 million. The deal, part of Flutter’s strategy to merge Betnacional with Betfair, positions the company for growth in the regulated Brazilian iGaming market. Despite expected short-term financial losses, Flutter sees long-term profitability ahead.
Unibet’s owner, Flutter Entertainment, assures its place in the Brazilian IGC and betting markets after signing the agreement to buy NSX Group, which owns Betnacional, one of Brazil’s most significant betting and online casino brands. The proposed transaction is worth $350 million, which will be all cash. It is seen as a significant move for Flutter in the new and rapidly liberalizing Brazilian market, in which it already operates through the Betfair brand.
On completion of the deal, Flutter looks to merge the operations of Betnacional and Betfair in a bid to create a new powerful entrant in Brazil’s yet-to-be-regulated gambling market. NSX, through which Flutter could generate up to $256 million, is expected to allow the company to gain a better grip on a market that is expected to grow significantly in the future.
The deal, once customary approvals from regulatory authorities are met, is expected to be closed by the second half of 2025 and also enshrine some contingency to buy more stakes in the next decade. Flutter stated that with this particular deal, the company will be positioned to harness the potential prospective in Brazil, thus the gambling industry.
The prospectus for Flutter Entertainment pointed out that “Flutter Brazil will be exceptionally well placed to capitalise on this large growth opportunity in the newly regulated Brazilian market.” The firm claimed that following success similar to the recently regulated US market, this new market has the potential to give the company a larger customer base and a secure future if investments are made discriminatively.
It is still part of Flutter’s overarching approach to identifying new growth markets, which has also been carried out in other countries.
The Brazilian iGaming and sports betting markets will be fully regulated in 2025, and Flutter Entertainment is already planning to confront rivals such as Bet365 and Betano, which have been actively entering the country. Flutter’s recent NSX Group entry into the Brazilian market in 2021 has bolstered its position as expected. This has positioned it to secure a share of 12% of the sports betting industry and 9% of the iGaming in Brazil.
Despite the promising acquisition, Flutter anticipates facing temporary financial challenges. The company projects its adjusted EBITDA loss in Brazil will increase to $100 million in 2025, up from a previous estimate of $90 million. However, Flutter remains optimistic about its long-term prospects. Despite these initial setbacks, the company believes its strategic investment will enable it to capture a growing share of the Brazilian market.
Flutter is committed to maintaining a mid-term leverage ratio of 2.0-2.5x, reflecting its confidence that the acquisition costs will eventually stabilize and the company will progress toward profitability.
